Recent Developments June 2017
Intent not required for exclusion due to serious misrepresentation
On 4 May 2017 the Court of Justice of the European Union ('CJEU') clarified for the first time the provision in the procurement legislation that in case of serious misrepresentation a tenderer may be excluded from participation in a public tender procedure. The CJEU stated that for such exclusion, it is not necessary that the tenderer acted intentionally. According to the CJEU, it is sufficient for the exclusion that the tenderer is guilty of some degree of negligence which may have a decisive effect on the decisions by the contracting authority to exclude tenderers from being selected or awarded the public contract. This judgment stresses that tenderers need to be very careful when providing information as wrong information may lead to exclusion, even if there is no wilful misconduct on the part of the tenderer.
Breach of Telecommunications Act is grave professional misconduct
In a recently published decision, the district Court in The Hague followed the reasoning of the Court of Appeal regarding the qualification of a fine based on the Telecommunications Act ('TA') as grave professional misconduct. The Court stated that such a fine is comparable to a fine for an infringement of the competition rules: the determination of a significant market power within the meaning of the TA takes place on the basis of the same criteria as the determination of a dominant position and the aim is to prevent abuse of significant market power. According to the Court, it is not relevant that the fine was not yet irrevocable and still subject to administrative objection proceedings. Furthermore, the tenderer should have mentioned the fine in the prescribed self-declaration, even though it did not agree with this fine – and doing so would not qualify as self-incrimination. Relevant fines should therefore always be mentioned in the self-declaration as the Court stated that omitting such a fact qualifies as serious misrepresentation. Clarifying the situation only in a separate document is considered insufficient. The tenderer was therefore rightfully excluded according to the Court.
Read more (Dutch only).
Attribution of grave professional misconduct to parent companies and employer
The district Court in Utrecht recently published a decision in which it assessed whether a joint venture company should have been excluded from a public tender procedure because both its parent companies had been fined for breaching competition rules. The Court stated that the joint venture company was an independent undertaking and that the behaviour of its parent companies cannot automatically be attributed to this joint venture. This attribution could take place if the joint venture would have cooperated with its parent company to circumvent the exclusion for grave professional misconduct by participating in the tender through the joint venture; according to the Court, such behaviour was not demonstrated sufficiently by the complainants.
Another question of attribution came up before the Commission of Procurement Specialists, which is instituted by the Dutch Procurement Act and gives non-binding advice. The Commission stated that grave professional misconduct by an employee can easily be attributed to its employer (the undertaking) if the employee acted within the scope of its powers.
The Dutch central government organised a tender procedure divided into twenty lots. The tender documents contained the – common – provision stating that if multiple group companies submit a bid for the same lot, they must prove that they participated independently and without knowledge of the relevant market behaviour of the other group companies bidding for the same lot. The question was raised before the district Court of The Hague whether this should also apply regarding bids for different lots by entities from the same group. The Court stated that there is a difference between the competition law concept of an 'undertaking' (which may consist of multiple legal entities) and the procurement law concept of a 'tenderer'. In principle, a contracting authority must allow different tenderers from the same undertaking to submit a bid. According to the Court, the event of multiple group companies submitting a bid for different lots does not constitute unfair competition; if they bid for the same lot, the provision mentioned above sufficiently safeguards competition. This means that contracting authorities are not required to limit the possibility to bid for multiple lots by companies from the same group.
Read more (Dutch only).
The Houthoff Buruma EU team is also available at email@example.com or +32 (0)2 507 98 00.